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CD Investments: How Much Can CDs Earn?
CDs are savings accounts for short-term cash investments. Compare returns on a CD with the calculator below.
Spencer Tierney is a consumer banking writer at NerdWallet. He has covered personal finance since 2013, with a focus on certificates of deposit and other banking-related topics. His work has been featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is based in Berkeley, California.
Sara Clarke is a Banking editor at NerdWallet. She has been an editor and project manager in newsrooms for two decades, most recently at U.S. News & World Report. She managed projects such as the U.S. News education rankings and the Best States rankings. Sara has appeared on SiriusXM Business Radio and iHeartMedia’s WHO Newsradio and has been quoted in The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other outlets. She is based near Washington, D.C.
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Certificates of deposit can be considered smart, low-risk investments for some of your money. A CD investment provides guaranteed returns and your money stays federally insured. How much interest you can earn on a CD depends on the rates, which can be affected by Fed rate increases. See what CDs can earn below.
CD comparison calculator
Calculate what interest you’d get from two different CDs. To see how rates really matter, keep the deposit and term lengths the same and notice how the interest rate would affect your overall savings.
Here’s an example. If you invested $10,000 in a five-year CD at 0.50% APY, you would have earned about $253 in interest at the end of five years.
Now let’s try a top rate at an online bank. If you invested that same $10,000 in a five-year CD at 4%, your account earns about $2,160 in interest, a difference of more than $1,900.
4 elements of CDs that can affect returns
CD rate: This factor determines how much your money grows over time. See our list of the best CD rates.
CD term: CDs have fixed term lengths typically ranging from three months to five years. The longer the term to let your money grow, the more interest you can earn. Learn more about CD terms.
Deposit amount: Unlike regular savings accounts, CDs typically require the entire sum you want to save upfront. The larger the amount, the more interest you can earn. Banks tend to have minimum deposit requirements as well. Learn about how much to put into CDs.
Early withdrawal penalty: If you need to cash out early from a CD, there’s usually a cost. The penalty isn't usually a percentage or fixed fee, but a certain number of months of interest you’ve earned or would’ve earned. Learn more about early withdrawal penalties.
Frequently asked questions
Is a CD an investment?
Yes, a CD can be considered an investment — or a means of generating returns — for your short-term savings. An investment doesn’t refer just to funds in the stock market.
Are CDs a good investment?
Yes, if you’re looking for guaranteed returns with little to no risk. Other types of investments, such as in the stock market, can offer greater returns, but with much greater risk.
How much interest will I earn in a CD?
It depends on the interest rate the bank offers and the length of the CD’s term. Here’s an example: $5,000 invested in a 1-year CD with a 4.00% APY would earn about $200 by the end of the term. Use the calculator on this page to see other combinations.
Can you lose money in a CD?
Yes, but only if you withdraw your money from a CD before the term ends. Most banks charge a penalty fee equal to a certain amount of interest — for example, six months’ worth. Learn more about how to avoid early withdrawal penalties.
Is a CD an investment?
Yes, a CD can be considered an investment — or a means of generating returns — for your short-term savings. An investment doesn’t refer just to funds in the stock market.
Are CDs a good investment?
Yes, if you’re looking for guaranteed returns with little to no risk. Other types of investments, such as in the stock market, can offer greater returns, but with much greater risk.
How much interest will I earn in a CD?
It depends on the interest rate the bank offers and the length of the CD’s term. Here’s an example: $5,000 invested in a 1-year CD with a 4.00% APY would earn about $200 by the end of the term. Use the calculator on this page to see other combinations.
Can you lose money in a CD?
Yes, but only if you withdraw your money from a CD before the term ends. Most banks charge a penalty fee equal to a certain amount of interest — for example, six months’ worth. Learn more about how to avoid
You can find CDs that have rates many times the national average. Online banks and online credit unions tend to have the top rates. Check NerdWallet’s best CD rates.
A savings account is a place where you can store money securely while earning interest.
A savings account is a place where you can store money securely while earning interest.
4.20%SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 1.20% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 4.20% APY for savings. Members without direct deposit will earn 1.20% APY on all account balances in checking and savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 04/24/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
4.75%Annual Percentage Yield (APY) is accurate as of 05/09/2023. APY is variable and subject to change at any time without notice. No monthly service charge. No minimum balance requirement. Must fund with 15 days of opening account.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
4.50%Annual percentage yield (variable) is as of 5/8/23. 5.00% APY with a $75K deposit or 4.75% APY with a $25K deposit. New customers only with qualifying deposit. Terms apply.
5.10%The annual percentage yield is effective as of Friday, May 19, 2023. APY is a fixed rate and a $1,000 minimum balance is required. Bask Bank will pay this rate and APY through your CD maturity date. Fees could reduce the earnings on your account, and an early withdrawal penalty may be imposed for early withdrawal. If your CD is not funded with at least $1,000 within 10 business days after the date the account is opened, it will automatically be closed. Read the full terms here: https://www.baskbank.com/terms-and-disclosures.pdf
3.30%Your annual percentage yield can be as high as 3.30% based on the following combined rate rewards: direct deposits (not including intra-bank transfers from another account) totaling $1,500 or more each month will earn 0.40%. A qualifying direct deposit is required for the remaining interest rate qualifications to apply. Ten (10) point-of-sale transactions per month using your Rewards Checking Visa® Debit Card for normal everyday purchases with a minimum of $3 per transaction, or enrolling in Account Aggregation/Personal Finance Manager (PFM) will earn 0.30%; maintaining an average daily balance of at least $2,500 per month in an Axos Self Directed Trading Invest account will earn 1.00%; maintaining an average daily balance of at least $2,500 a month in an Axos Managed Portfolio Invest account will earn 1.00%; and making a monthly payment to an open Axos Bank consumer loan (commercial and business loans excluded) via transfer from your Rewards Checking account will earn a maximum of 0.60%.
Monthly fee
$0
Money market accounts pay rates similar to savings accounts and have some checking features.
Money market accounts pay rates similar to savings accounts and have some checking features.
They’re safe. Like savings accounts, CDs are federally insured to protect your money, both at online and traditional banks as well as at credit unions. This means they have minimal risk, whereas investing in the stock market — another option to grow your money — is more unpredictable and can lead to losses, especially in the short term. See more about CD safety.
But CDs have an opportunity cost. The typical CD has a fixed rate, so once you lock up your money for months or years, you close the door to higher rates that might appear.
Bottom line: CDs might be right for you if you want to avoid risky investments and you’ve set aside money you won’t need for some time. (If, on the other hand, access is a priority, check out NerdWallet’s best savings accounts.)
How to have CDs and flexibility
If you're trying to decide between a CD and something less restrictive, there’s a middle-of-the-road option: CD ladders. This is a savings strategy in which you open CDs of varying lengths. One common scenario involves opening five CDs, with terms of one year, two years, three years, four years and five years. The goal is to have one CD maturing each year to give you the option to reinvest or cash out each time. Learn more about CD investment strategies.
How do CDs work?
Learn more about choosing CDs, understanding CD rates, and opening and closing CDs.
High-yield savings accounts: These regular savings accounts, generally available at online banks and credit unions, provide some of the best savings rates.
Savings bonds: Similar in function to a CD, a savings bond lets you earn interest on an upfront sum of money that you can’t access for a period. Instead of lending money to a bank as you do with a CD or savings account, you lend to the U.S. government. During high inflation, a Series I savings bond, or I bond, has an inflation-adjusted rate that may be appealing.
